VMware's announcement Monday of its new VCloud initiative is an early attempt to offer a more "enterprise-class" cloud offering. Considering that most cloud offerings are based on virtual machine images, it's a smart (and obvious) move by VMware to stake its claim.
To date, the majority of cloud offerings have lacked certain enterprise fundamentals--things like security models, licensing agreements, and so on that are requirements, not accessories. By aligning with hosting providers like Rackspace, VMware starts to offer show some of the enterprise type of attributes we'll eventually see from companies like IBM and Hewlett-Packard.
But why has VMware taken so long to embrace the cloud? And what will happen to all of the providers who are VMware customers who now find themselves competing directly with the source?
Things should start to get interesting for Xen and XVM. I only have cursory knowledge of Red Hat's Qumranet acquisition, but there is a clear opportunity for basically everyone who is not VMware to go after the providers that are currently locked in.
Oh, and don't forget Microsoft, which has a massive network of value-added resellers and hosting providers locked in to Windows and who will undoubtedly adopt Hyper-V.
Overall this move is beneficial for the whole virtualization market, but it's hard to see how VMware can maintain its dominant position if cloud providers see them as a threat instead of a partner or technology supplier.